As the S&P 500 approached its all-time high level, the bond market is quietly collapsed yesterday.
iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) broke its 50 DMA yesterday and has now had the second worst 5-day slide since the March 2020 meltdown.
The last time bonds got hit this hard was the end of June and the S&P 500 had sold off over 6% from its high.
However, history doesn’t always repeat itself exactly, so I never want to assume that it will.
Additionally, bonds falling is not always bad for stocks. The more important question is, why are the bonds falling?
If bonds are falling because the economy is recovering faster, that’s good for stocks.
On Tuesday and Wednesday, bonds fell on the back of two inflation reports. Yesterday they dropped when the there wasn’t enough demand at record sized $26 billion auction.
Neither sounds good for stocks.
The market has a funny way of ignoring bad news, until it can’t.
The TLT is sitting is through the 50 DMA, and at the major closing trend line you see below, and JNK looks to be rolling over.
Don’t panic, but don’t let the S&P 500 almost all-time high make you take your eyes off the bonds either.
S&P 500 (SPY) Doji and today’s high is 3 cents lower than Wednesday. Be cautious under 332. Watch 330 as important support
Russell 2000 (IWM) Double inside days! 160 resistance area and 153 key support.
Dow (DIA) Consolidation day. 270 now pivotal support
Nasdaq (QQQ) Ran up to old high, but like the SPY, couldn’t get there or stay there. Doji. 275 is the all-time high level to break. 260 is key support level and a trendline.
TLT (iShares 20+ Year Treasuries) Weak demand at yesterday's 10-year auction sunk the bonds. Now well below its 50 DMA. 162 next big support.